Mexico media tycoon clash heats up, Slim attacked for Dish deal

Michael O'Boyle, Elinor Comlay

6 Min Read

MEXICO CITY (Reuters) - Mexican tycoon Carlos Slim is facing renewed accusations from rivals that he has skirted the law in a tie-up with pay-television provider Dish Mexico as a new telecommunications regulator prepares to issue a series of landmark antitrust rulings.

Mexican billionaire Carlos Slim speaks during the presentation of a digital platform, which was created in partnership with the Carlos Slim Foundation and online course platform Coursera, inside Soumaya museum in Mexico City January 29, 2014. REUTERS/Edgard Garrido

Mexico’s media titans have been slinging mud at one another for years, but the battle heated up when television companies started offering digital phone and Internet services, encroaching on Slim’s territory while the terms of his government concession prevent him from offering TV.

Televisa’s satellite TV business Sky has been facing tough competition from Dish Mexico, which offers its most basic package at less than half the price of a similar Sky package.

Televisa and other rivals have complained for years that the partnership between America Movil’s home-phone unit Telmex and satellite television firm Dish Mexico is improper.

This week, local media published a memo that allegedly details a deal for Telmex to buy a stake in Dish, and both of Mexico’s top broadcasters, Televisa and TV Azteca (AZTECACPO.MX), jumped on the news to demand the regulator renew a 2011 investigation.

Reuters could not immediately confirm the authenticity of the documents.

Telmex, which is now a unit of Slim’s America Movil, has notified investors of the option to buy a stake in Dish since 2009, according to regulatory filings.

“This has all been very transparent. There is no problem with this partnership,” said Slim’s spokesman, Arturo Elias.

Telmex and Dish have had a deal to print a single bill for shared services, but Televisa alleges the document published by several media this week suggest a more comprehensive deal.

“The scope of the operation was a lie,” Televisa spokesman Javier Tejado said on Friday, referring to the documents that called the option agreement “Project Alpha”.

“The first thing I ask, if this is all as transparent as Telmex says, why do they hide behind a secret name like ‘Project Alpha?’”

Dish Mexico, a company backed by Mexico-based MVS Comunicaciones and Colorado-based EchoStar Corp (SATS.O), has drawn millions of customers.

In 2011, Reuters reported that Mexico’s competition watchdog had opened a probe to determine whether the tie-up between Telmex and Dish was an illegal, backdoor entry to the television market.

The probe has been handed over to the Federal Institute for Telecommunications (IFT), a new regulator established by last year’s constitutional reform aimed at increasing competition in Mexico’s television and phone markets.

Lawyers said that if Slim has not exercised his option for Dish, he is not flouting the terms of his concession agreement.

“Still, all the legal ingredients are there for this deal to be put into effect,” said Jose Luis Benavides, a telecom expert and lawyer. “And the deal, which isn’t finished, has all the ingredients for distorting the telecommunications and broadcast market in this country.”

America Movil says Telmex offers billing services to many companies, but Grupo Salinas, the parent company behind broadcaster TV Azteca and pay-television, phone and internet service Totalplay, disputes that assertion.

“We have requested billing and collecting services from Telmex since May of last year for Totalplay and certainly feel discriminated against,” said Eduardo Ruiz Vega, director of regulatory compliance for telecommunications. “Along with the distributed memo that ... surely begs further regulatory scrutiny.”

MUDSLINGING

The IFT is expected in March to declare Telmex, America Movil and Televisa dominant players in their markets, subjecting them to tougher regulations and specific obligations.

Televisa and TV Azteca have been waging a separate legal battle against Dish Mexico for transmitting their free-to-air channels on its satellite system.

New rules known as ‘must offer, must carry’ oblige pay television services to offer free-to-air channels. But the broadcasters have said that since the government has not yet agreed on the details behind these rules, they should not yet be forced to hand over their content for free.

This is just the latest round in an acrimonious and often litigious battle between the businessmen and their companies.

Although Slim used to be a large shareholder in Televisa and close with Azcarraga’s father, in recent years they have fallen out over issues including TV advertising and wholesale phone charges.

Several years ago, Slim pulled millions of dollars of advertising from Televisa after Azcarraga’s company raised rates 20 percent.

The companies in 2011 took out front-page newspaper ads criticizing each other, and a group called “All the Mexicans” disparaged Slim’s core phone business in a newspaper advert called “The Slimsons,” drawn in the style of the U.S. cartoon sitcom “The Simpsons.”

With reporting by Ana Isabel Martinez and Simon Gardner\; Editing by Jonathan Oatis